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Lord Avebury: My Lords, I am still a little surprised that it is so difficult to draft an amendment to the clause that would give effect to what the Minister said. We would have to rely on a Pepper v Hart analysis of what he has said, instead of having the matter in terms on the statute book, which is always less satisfactory. I am most grateful to him for saying that he will have another look at the matter before Third Reading. Without holding him to any specific government amendment, I sincerely hope that he will be able to come forward with some words to give effect to what he said this evening. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48 [Commencement]:

Lord Avebury moved Amendment No. 28:

"( ) Section 12 shall not come into force until the integration loan scheme under section 13 has come into effect."

The noble Lord said: My Lords, when the loan scheme was discussed previously, there seemed to be consensus that it should come into effect at the same time as the backdating of benefits ends, to ensure a relatively soft landing. As the Bill stands, from the moment that backdating comes to an end, successful asylum seeker A starting the rest of his life in the UK will be worse off to the tune of several hundred pounds compared with B, whose application was approved the
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day before. Yet A might have lodged his application earlier than B, and might have been unlucky in having a less efficient solicitor, or the caseworker who dealt with him in the IND might have gone on leave at the critical moment.

At the very least, Parliament ought to ensure that B is entitled to the loan on offer under Clause 13, so that he is not in a worse immediate cash-flow situation than A, even if he has to pay the loan back as soon as he starts to earn. That is the purpose of Amendment No. 28.

The Minister was unable to answer some of the questions that were put to him about the loan scheme on 15 June. I hope that in the intervening fortnight he has been able to take advice on them. I asked whether the Government had discussed their proposals with the banks and what the banks thought about the Home Office going into competition with them. If the Minister says that the reason for not using the banks is that these loans are to be interest free—as he explained and as he has said again this evening—why cannot the IND reimburse the banks for the interest they would otherwise have received on the individual loans of these amounts, taking into consideration a guarantee of repayment by the Government? Doing it that way would have avoided the necessity for the Home Office to dabble in a business of which it had no knowledge or experience.

I asked how much has been spent by the Home Office so far in designing the loans scheme. Crucially, the noble Lord, Lord Hylton, asked whether every successful refugee would be eligible or only those who had accepted an offer of accommodation from NASS. The subsistence-only applicants would have been out of pocket to a far greater extent and therefore in greater need of a loan.

We asked how much it would cost to set up a mechanism for what is specified in the clause and how much it would cost to vet and approve the applications when the scheme is up and running—a task which the banks undertake regularly in the course of their normal business.

We asked whether the calculation of the amount available for lending would begin from the time when the back payments were abolished and whether potential applicants would have to wait until the funds had built up to a certain level of capital. Of course, if the banks ran the scheme, these problems could be overcome because the initial capital required would be zero and the running costs of interest reimbursement would be partly or wholly funded by the savings in back payments. I beg to move.

Baroness Anelay of St Johns: My Lords, in Committee I asked questions about the gap between the end of the backdating of benefits and the start of the loans scheme because I thought it strange that the Government were not giving an assurance that there would not be one. The only assurance which came forward was, "Don't worry, it's not likely to be a big one". It is unusual to deny people their entitlement and not put in place immediately the alternative recourse
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to funds, particularly when the people have been correctly adjudged as refugees and are to be integrated into society. My question today must be: what will determine the length of the gap between the ending of the backdating of benefits and the start of the loan scheme?

Earlier today, the Minister told us that the loan scheme will be funded from the cancellation of the backdating of benefits. It will be completely self-supporting from that time. Two questions follow from that. First, which year of the backdating of benefits expenditure will be taken as the base when deciding what lump of money will go to the new fund? Having decided what that lump of money is, can the award start from day one, or must the Government build up their savings before they start making loans?

Another question occurred to me while listening to the noble Lord, Lord Avebury, reflecting on the questions posed in Committee by the noble Lord, Lord Hylton. What happens if I am at the end of the queue for loan applications and the money has run out in that financial year? Does it mean that I will receive no money—is this a stand-alone fund?—or does it mean that I must hope that the Government will make an ex gratia payment? We need to know who will qualify and how, and how the budget will be managed.

Lord Rooker: My Lords, I have been waiting almost all night to make this response, but that might have been a mistake. This is on the narrow issue of commencement and all these questions are "legit". I am tempted to say that I wish I had been asked them earlier when we were dealing with the issue, but I did not have the answers. I certainly do not have them now, but I have a key answer.

On the issue of commencement and the gap, I can get the answer out of the way. I am pleased to be able to inform noble Lords that in the period between discussions in Committee and today, further considerations have been given to the matter. I can provide the assurance that there is no reason why there should be any gap whatever. It is the Government's intention that there should be none. On the other hand, we do not feel it necessary to provide in legislation that there should be seamless transition. When we discussed the matter in Committee, that was the key.

Furthermore, as the loan fund will come from the savings, it also begs the question, "Until we get the savings, how can we give any loans?". I am speaking without notes, but I understand that a mechanism has been agreed with my friends in the Treasury that a sum will be placed at the use of the Home Office. Obviously, the loans would start at a few and gather in number. In other words, there would be a known budget. I do not know on which year it would be based—it could be the previous year or an average of the last three—but the sum of money would be made available for use by the Home Office.
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We are going into the banking system here rather than using the private banks, therefore loans will be available from day one for people in need. However, as I have said repeatedly, the fund is made up from the savings. It is not inexhaustible and it is not a loan system for anyone based on need. There will probably come a time during each year—I do not know—when the fund for that year will be exhausted. That will inevitably be the case because it will be funded out of the savings. It is not new money in that sense. However, it will be available from the beginning of the loan scheme. Obviously, there will be nothing in the kitty until the savings have been made, so a nominal sum will be transferred. As the savings accrue, the loans can be made, but the applicants will not be dependent on the savings because there will be a budget for the year. There is no intention for there to be a gap.

I will seek to get further particulars on the other quite legitimate questions asked by the noble Lord, Lord Avebury, as I am clearly duty-bound to do on this and other clauses that we discussed today. They are added to the list of questions for which I will have to find answers.

Lord Avebury: My Lords, the noble Lord has been good enough to give us the answer to our main question, but not to many of the others. We were in fact repeating the questions that we asked at an earlier stage. The noble Lord said he was tempted to wish that questions had been asked earlier, but they were. We hoped that by now he would have been able to come forward with some answers.

The reply he gave to the noble Baroness, Lady Anelay, was a matter for dismay. The scheme envisaged that the money would run out at certain points in the year and that anyone unfortunate enough to be in the queue for a loan at that moment would be out of luck. That is unacceptable. As the Treasury is in effect granting the Home Office an overdraft to begin the scheme, it could be asked to do so if there were meritorious applications for loans from credit-worthy individuals at points in the year when the funds allocated to the loan scheme had been exhausted. Why should not there be a repeat of the initial top-up with the Treasury lending money to the Home Office? It could then continue to make loans to bone fide applicants from the refugee community who otherwise would have to be told, as the noble Lord explained, "I'm sorry, but the money has run out for this year. You'll have to apply again on 1 January 2005".

We are grateful to the noble Lord for having undertaken to give answers to the other questions. I hope at least that we will be able to have a more informed discussion of the loan scheme at Third Reading. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
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